UK businesses warming up to South East Asian opportunities
New research commissioned by HSBC Commercial Banking has revealed more than half (57%) of UK businesses are planning to take advantage of the new Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) to increase trade with ASEAN.
The UK signed the CPTPP in July 2023 and is currently working towards ratification of the treaty. Following this, HSBC’s annual Global Connections survey asked international businesses in the UK about their plans to increase trade the region and found it had risen from 48% in 2022.
After the announcement of the trade deal, 43% of international businesses from the UK reported expecting their organic growth in ASEAN to increase by 30% or more over the next 12 months – the highest of any European market.
ASEAN diversity
Over the next two years, UK companies with existing links to ASEAN say they are most likely to prioritise growth in the regional powerhouses of Singapore (25%) and Thailand (23%). However, for UK companies seeking fresh opportunities over the next two years, firms have identified Malaysia as their top target market, with 23% of UK companies planning to expand here in the next 24 months, ahead of Cambodia (20%) and Indonesia (20%).
Stuart Tait, head of commercial banking at HSBC UK, said: “ASEAN has a young, diverse and digitally connected population, which provides access to a wide range of talent to suit the needs of international businesses. UK firms are tapping into basic manufacturing in the region’s developing economies as well as advanced goods and value-added services in middle-income countries and high-value professional services in Singapore.”
Digital attractiveness to UK business
A skilled workforce is currently the region’s number one appeal to UK-based firms, and with a third (32%) of UK businesses expecting technology to transform their workforce in the coming decade, the survey finds there is significant scope for the region’s appeal to increase further, with over a quarter (28%) of UK businesses viewing ASEAN as a global leader in 5G technology, and a similar number (24%) saying it plays a leading role in Artificial Intelligence and Machine Learning.
Challenges ahead
UK firms still report a number of challenges in the region, with over a quarter (26%) citing concerns over financial stability (including inflation, interest rates and currencies), and a further 25% saying their business is struggling to adapt to fast-changing regulations and dealing with cultural differences.
Stuart Tait, added: “ASEAN is a diverse region, and UK businesses wishing to trade here need to navigate multiple languages, regulatory regimes and ways of doing business. However, the CPTPP is providing more confidence, and with an international network that covers more than 90% of GDP, and trade flows and local experts in more than 50 markets, from emerging to developed HSBC can provide the support and guidance firms need to expand internationally with confidence.”
Commenting, the Minister for International Trade, Nigel Huddleston, said: “It’s fantastic to see more and more British businesses recognising the huge opportunities on offer in Southeast Asia, a region expected to become equivalent to the third largest economy in the world by 2027. Better still, they are already planning how they can take advantage of our major new trade deal with the region, CPTPP.
“Our accession to CPTPP, alongside the wider work we are doing to unblock barriers to trade, will make it even easier and cheaper for businesses to sell to these fast growing, dynamic markets.”
